I grew up in a rural community. My father was completely blind. I am the oldest of four sons, and as long as I can remember I have had entrepreneurial desires. Despite some lofty ambitions, I was never any kind of a standout kid. I was one of those boys who was often overlooked, and I spent a lot of time hoping I wasn’t the last kid picked on the basketball team. Nonetheless, I had this incredible and deep desire to do something of significance with my life.

I remember when I was eighteen years old and just finishing up high school, I wrote down some personal goals. I had always been goal-oriented, and my mother encouraged me to write down my goals. One of those goals was to become the CEO of a major company. Even though I wrote it down, I knew that was as far off a goal as I could have set. I didn’t think that there was any chance or any possibility in the world of actually ever reaching that goal at that time; in fact, I might as well have written that I was going to sprout wings and flap my way to the moon. But that became a powerful goal. It was my beacon in the fog.

I was very fortunate to have been able to get a good education. After graduating, I worked hard and had some incredible opportunities. And I ended up having the opportunity to work as a CEO and a general manager at some large and well-known companies. Midway through my career in corporate America, I was given a leadership role in a large, international organization. I was eager and determined to earn my stripes, and I basically committed to do so at all costs. I was a very young general manager of the U.S. division, and I was determined to do anything that was necessary to succeed. My commitment bordered on insane. I had a young family, but I was traveling hundreds of thousands of miles every year. There were nights I would stay at the office all night long to do what I felt needed to be done. I was going to succeed, and I didn’t care about the costs. Then I learned the lesson that it is not worth risking everything of importance in your life to achieve success. The division I was over became very successful. In the middle of our run, my mentor and boss, Dr. Peter Horne, called my secretary and said, “I need to have a visit with Rich.” That meant jumping on a plane, flying to Atlanta, then from Atlanta to Amsterdam, and from Amsterdam across the channel to Birmingham, England. Door-to-door, this was a twenty-hour trip. When I arrived, Dr. Horne pulled me into his office and sat me down. He then said, “Rich, we’re really delighted with the progress you’ve made in the business. Things are coming along rather nicely.” And then he made this comment, which has stuck with me: “I want you to remember one thing though, Rich. You can replace almost anything in this world. You can replace a car. You can replace a job. You can replace money. But you can’t replace your health, you can’t replace your trust relationships, and, most importantly, you can’t replace your family.” Then he shooed me out of his office, and I began the long journey home.

Those twenty hours, which I spent alone on a very crowded airplane, gave me plenty of time to think about what Dr. Horne had just said. Most of my thoughts centered on my wife and children. For years I had been telling my wife, “This next project is a big one for me. I am going to give it my all for six months, so don’t plan on seeing much of me. But once I finish it, things will be different.” The six months would pass. I would complete the project, and then a new project would come along and I would start the cycle all over again. Those six months had turned into years as I kept promising, “If I give my all to this for six months, then we will have it made.” As we crossed the Alantic, I reflected on a trip I had taken to India some months before. When I got home, all of my sons and I came down with whooping cough, or pertussis. We had all been immunized, but somehow we contracted this miserable illness. It was terrible. I remember coughing so hard one day that I literally vomited, but I lacked the discipline to take some time off from my work to get better and help my wife with our sons. My youngest son at the time was Nathan. He was less than a year old when we all got sick, and it was life-threatening for him. In fact, he ended up in the hospital, where my wife took care of him because I was too busy.

Flying home, I realized I was falling into the “all or nothing trap,” and I resolved that I was going to do better as a father and husband, and when I got home I made it a point to gather my young sons together, give them each a hug, and tell them I love them. But when I went to pick up Nathan, he hollered and screamed. As he pushed me away, I realized he did not even know who I was. At that moment, I realized that achieving my goal of being a CEO was not worth losing the love of my family. And I began to change both my priorities and how I actually lived my life.

When you are planning out rewards, you need to very specifically tie each reward to the zig or the zag you are heading toward. I always establish timeframes, often in the form of quarterly goals. When we make our quarterly goals, we sit down as a team and decide what we want to accomplish. Once we have established the goal, we spend almost as much time discussing what reward we will get when we achieve the goal. Then we make signs and post them all over the office, with the goal written out over a picture of the reward.

One of the signs I used in our office had a picture of people snowmobiling. We titled it, “Plowing our Way to Victory.” Around the picture were listed the goals of getting three new clients and having a financial target of monthly recurring profit. Another goal was to hire one more engineer and to retain another engineering client.

For the business my son and his friends work on, they helped me develop a very specific goal if we hit certain targets. They then posted pictures of the cruise ship we would all board if they met their goals, and also the ports we would visit. Sure enough, each of then achieved their goal, and we went for a one-week cruise.

As you set long-term goals, don’t overlook the need to reward yourself and your team along the way. These in-between rewards are ones I like to keep random. Then, when I see a team member doing a particularly good job at something, I will hand them a pair of movie tickets or a gift card. The other day, we sent one of our contract employees a special “thank you” that he was not expecting. Ever since then, he has gone over and above on the work that he does for us because that little reward meant so much to him. Sometimes, random rewards will actually mean more than guaranteeing a treat when you push the same button over and over.

The work you’re doing is challenging and difficult, and as you hit each zig you take a break from the intensity, celebrate, and enjoy the fruits of your labors. Then you can do a little jump and turn your skis in the other direction toward the next goal. We humans do have some things in common with my little salivating dog. When we align our efforts with little treats along the way, our resulting behaviors will lead to the achieving of our goals. The rewards make all of the effort worthwhile.

Last year my wife and I went on a little getaway to Las Vegas. We had booked our hotel online, and we got a great rate on your normal room at one of the nicest hotels in Vegas. When we checked in, the woman at the front desk took a liking to us. She saw that we were on a romantic getaway, and she mentioned that most of the regular rooms were booked for a business convention. As she handed us our key cards, she mentioned she had upgraded our room, adding, “I am not going to tell you about the room now. You can thank me later when you see it.”

When we opened the door to our room, we gasped. She had upgraded our $69 room to one of the presidential suites. It was on the twenty-seventh floor and had a 180-degree view of Las Vegas. The suite was 2,200 square feet. It came with an entryway, a formal dining area, a living area, a huge bedroom, and two bathrooms. My favorite part was the master bath suite. It had an all-glass shower and a huge hot tub that overlooked the city. And we did, indeed, thank this very kind front-end manager.

When I came back after this spectacular vacation with my wife, I was describing to Curtis this hotel we stayed in. At this point in our business, Curtis was still working full time in his other job, and we were not making the progress we wanted in this new partnership. As we chatted, it hit me that I knew what would motivate Curtis. He wanted to take his wife on a vacation and stay at the same hotel my wife and I had just enjoyed—and in the same room!

I told him I had a reward in mind, and we made a list of four or five things that needed to happen. We posted this list in the hall of our office, along with a picture of this fantastic resort. The goal was that when those five steps were achieved and our business was stabilized, Curtis could quit his job and come into the business full time. But equally rewarding to him was that he could also take his wife on an all expense paid trip to stay in this same hotel. I found a picture of this hotel and drew stick figures of Curtis and his wife staying on the twenty-seventh floor and enjoying the view. I even added a picture of its world-renowned restaurant because I knew his wife likes to dine at exclusive restaurants. On the bottom of my artwork, I added a deadline of thirty-five days to earn this reward. Curtis was salivating, even though we were not sure how this was going to happen. But we did reach each of our goals, and Curtis and his wife did get to have a fantastic vacation. And my reward was that I now had him working with me in our business full time.

Being a fundamentally nice guy, I have made the mistake multiple times of giving a reward when the performance didn’t warrant it. Every time that I have done this, I have ended up regretting it. Even though you may feel for a minute that you’ve done the right thing, you’ve likely created a pattern and behavior system that will bite you in the end. In some cases, being “nice” has been the death knell of my businesses.

My family and I have traveled to Nepal several times, and I am always overwhelmed by the rampant poverty. Like anyone who has traveled there, I have been approached countless times by small children who must beg in the streets for what little they have, and I always ponder what I—as one person with limited means—can do to help.

The last time we were there, several young beggars followed my sons, our two Sherpas, and me everywhere we went. They were filthy, and their ragged clothes were soaked with urine. They approached us repeatedly, gesturing to their mouth and then their stomach to show us they were hungry.

I believe that giving a person a handout does little to change his or her circumstances, but it broke my heart to see these small boys, who were about the ages of my younger boys. Then I hit upon an idea.

We were in the middle of a central square where countless people gather each day to worship and shop. While there are numerous trash cans in the square, no one seems to use them, and the area is covered with what looks like years of debris. I decided I could solve two problems at once, so I offered one of the beggars 100 rupees (about $1.40) for every bag of trash he picked up and put in a trash can. Given that the daily income for an adult in Nepal is about $2, that seemed like a powerful incentive.

What I was asking would have taken a couple of minutes, but this little boy looked at me like I was nuts and ran off. Another little boy approached me, and I made the same offer. He indicated he would do it, but wanted payment up front. Now, I may be a soft touch, but I’m not stupid, so I told him he would get paid upon completion of the work. He, too, ran off.

The third boy who approached me was the dirtiest and scrawniest of the bunch. I really thought my plan had merit, so I upped the offer to 500 rupees. His initial reaction was to give me a look that said, “No one picks up trash. Not even beggars. What kind of crazy American are you?” But this time, I grabbed a bag and started picking up trash myself. He soon joined in, and was stuffing trash into his bag as quickly as he could. There was so much trash that our efforts were like trying to drain a pond using a teaspoon, but we were at least doing something to make a dent. And soon others were joining in, including a gentleman who runs a humanitarian organization who saw my impetuous project as having some potential.

When we finished working and I paid the boy, he couldn’t have been more proud. And several shopkeepers around the square began making similar offers to other boys who clearly were in need.

I realize that we made a very small dent in the problems of world hunger and cleaning up the environment that day. But I also know that those who watched, including my sons, learned that rewards need be based on our efforts, not our wishes—and that the right reward system can provide the motivation to get to work and make a difference.

I’ve had partners who used the whip. There certainly are times when you have to discipline. However, my contention is that the whip needs to be used very sparingly—and never as an immediate reaction. If you whip someone (verbally, of course), you may get a burst of incredible performance. But you will inevitably lose your long-term productivity (and your top performers) if you punish too often.

I have seen people who use the whip over and over. Soon the people around them reach the breaking point and basically say, “I don’t care. Whip me to death. I am done.” They check out, and apathy sets in. I know a young, up-and-coming executive who was a master with the whip. Unfortunately, he was so hungry to prove himself that he burned through all the people around him. Now, no one in our area will work for him.

There is a fine balance between knowing when to reward and knowing when to discipline. When there is an out-of-bounds problem, discipline needs to be meted out. In our home, we do not have the long lists of rules I have seen some parents enforce. Instead, the rules we do have are rules that fit with our core values, and we are very strict with these few rules. I often say to my kids. “You will make some mistakes. That is how you learn. Just don’t make the big mistakes!” Too many little rules can create confusion and can actually undermine the more important rules.

Seeing the Value in Failure

In my current company, we have set four sets of quarterly goals this year. Honestly, I hope we miss one of these goals. I do not want to miss the first set or the second, but if we miss the third goal it gives me a opportunity to point out that this is what a little failure feels like, and your success is not guaranteed. I’ve managed teams that developed a bit too much ego. That can lead to arrogance and missed goals. If you handle such situations well, it will bring your team back to where they’re hungry and want to win again.

It’s important to not overcomplicate your system of goals and rewards. In one of my early ventures, I created a chart that had eighteen different targets to hit and a simple “REWARD” written across the top. My employees were unclear as to what the priorities were and what the reward would be. I have found it’s best to have three or four target goals to hit, with a very specific reward at the end. The goals we typically fail to achieve are the ones that are complex and unclear.

Employees should also feel free to devise their own systems (within reason, of course). My son and his friends came up with their own motivating reward. They had a Burger King crown they kept in the office. They were all highly competitive, and they would have contests to see which one could create the most web links on a given day. The winner then got to wear the crown. The reward didn’t cost me anything, and it was fun to see these seventeen-year-old boys engage in an all-out push to optimize their web sites, just for the reward of wearing a paper crown.

One of the benefits of having a team set its own goals and rewards is that the members learn to govern their own behavior. That way I don’t have to micromanage my teams.

Avoid the Entitlement Mentality

When I was managing Mitsubishi Electric, I was still young and not completely financially stable myself. I had an awesome killer team that was also young and hungry. I began the practice of taking them out to lunch every Friday. I would pay for their lunch myself because I didn’t feel the company should have that expense. This was my personal way of showing my appreciation. A few months into this, I ended up in a tough stretch where I was traveling almost nonstop. As a result, there were a few Fridays where we didn’t make it to lunch. Soon, there was muttering and complaining. Morale dropped. These employees had become so accustomed to going to lunch each Friday that they felt they were entitled to this perk. What started as a good intention led to my being the bad guy because I did not consistently provide them with their expected lunch.

I had a similar experience with my crew of teenagers. I would stock the fridge with food and soda pops so they could grab something to eat after they finished school and before they started to work. A few times we got so busy I failed to replenish the quickly consumed food items. Almost immediately, some of the boys started murmuring, “I can’t believe it, there aren’t any burritos or Hot Pockets in the fridge.” If I have erred, it is because sometimes I have rewarded too quickly or too often.

Allow For Some Flexibility

Situations change, and sometimes you need to change with them. I’ve lived through shifts in markets where even though my team gave an incredible effort, they fell a bit short of the original goal. In those situations I still gave the reward so the team didn’t lose steam. However, be careful not to reward when the reward is not merited.

I employ a group of mothers who work for me from their homes. They are motivated and hard working. I told them once that if they had ten consecutive days of making $500 in profit, I would give each of them a large bonus. These women worked their hearts out. At the end of the period, I saw that while they were only clearing $300 to $400 on the weekdays, on the weekend their profits were $800 to $1,000. Even though they did not have the ten consecutive days, on an average they were well over the target I had set. I told them that in this instance, average really does count for something, and they earned their reward.

Before developing your system of rewards, remember that what motivates one person may not motivate the next. When I was general manager of About.com’s web services division, I had a highly talented engineer named Earl who worked for me. He was, without question, one of our brightest engineers, but I continually struggled to figure out how to motivate this guy. I regularly gave out bonuses, rewards, and incentives that everyone else loved, but Earl did not seem to care. Nothing I offered seemed to motivate him, and I knew his contributions were affected by his apathy toward my rewards system.

As we were planning our first Christmas party, I finally figured out what motivated Earl. During a planning session, he asked if he could play a piano number for the entertainment. I didn’t think much about it, but told him that would be fine. The night of the Christmas party, Earl walked in, all decked out in a tuxedo, complete with flowing tails. When he sat down to play the piano, it was clear he cared deeply about his performance, and he delivered his delightful number with the flare of a concert pianist. Everyone cheered and clapped for him, and then he stood up and gave an overly exaggerated bow. From that point forward, I knew what motivated him. He didn’t care about things or money. He loved recognition and any opportunity to perform and take a bow.

As the New Year began, I implemented what I dubbed “Lunch and Learn with Earl.” Twice each month, we’d have a Lunch and Learn where the company would buy lunch and the junior engineers could visit with this master engineer. They would ask him questions, he would impart his wisdom, and at the end they would all clap and Earl would beam. The junior engineers learned a great deal from Earl, and Earl loved the recognition. Productivity went through the roof.

I had another employee who would always get really excited about the rewards I proposed, but before she achieved her goal, she would simply go out and buy the same thing she was going to be rewarded with. And while she did good work, I knew she could be doing far more. This pattern caused me immense frustration, but I finally found out that what she really wanted was for us to pay for her tuition at school and call it a scholarship. By listening carefully to things she said, I learned that her parents had plenty of money, but they had always drilled into their children how they had gone through college on scholarships. This young woman had good grades, but because she had no real financial need, she hadn’t been able to get a scholarship. So, I developed a reward system that provided her with the scholarship she so desperately wanted.

It’s also important to figure out what the people you are trying to motivate do not want. I’ve learned that a reward for one person may actually feel like a punishment for another. A few years ago, we established a reward for the young men who were working for CastleWave to go to Las Vegas and see the Blue Man Group. We set up a very specific goal and also very specific rewards, which included going to the Stratosphere and riding on a roller coaster set atop of one of the tallest hotels that juts out over the city. These boys, with one exception, worked extra hard because they loved the idea of this trip. When they weren’t focused on the work, it was all they talked about. The exception happened to be a different personality type. He was one of our key engineers who was a little shy and did not like big crowds. In fact, the thought of going to Las Vegas with a bunch of loud teenagers couldn’t have been less motivating.

Gratefully, he came to me and let me know that he really did not want to go on this trip. So, I found something else that motivated this engineer, and took the other boys when they reached their goal. If I had ignored his needs, the outcome might have been tragic. He was a key member of the team, and he could have subconsciously tried to sabotage the goal for the rest of the group because he did not want to go on the trip.

As you have been rushing from goal to goal or from zig to zag, have you ever found yourself asking, “Why am I doing this?” If you haven’t created and implemented a system of rewards for yourself and those around you, you’re going to find yourself burning out long before you reach your beacon in the fog. Success and money alone are insufficient motivators. I have found that if I tie a reward to the successful completion of each zig, I stay far more motivated than if I never pause to enjoy some benefit specifically tied to its completion. And I find I’m much more enthused about beginning the next zag.

We humans are really not much different from Pavlov’s salivating dogs. If we catch a glimpse of a slab of meat, we will drool, salivate, and do just about anything to get to it. My family has what I view as miserable, little dog that is half-poodle and half-Chihuahua. She is the most high-maintenance little mutt I have ever met. She does not like me, and I do not like her. The problem is the rest of my family loves this dog, so she and I have put up with each other. She will have absolutely nothing to do with me, unless I have a little piece of meat in my hand. Then she views me as her best friend, and her behavior shifts dramatically. She pants and begs and pleads for that little piece of meat. And, more important, she will do anything I ask. Interestingly, she does not like just any kind of meat. She likes the little slices of cheap lunchmeat that I am sure are not healthy for dogs. Our other dog will eat anything I give her, but not this little mutt. From the day we got her, I have had to find the things that specifically work for her.

We all have things that motivate us. The legendary football coach Vince Lombardi said, “Coaches who can outline plays on a blackboard are a dime a dozen. The ones who win get inside their player and motivate.” Recognizing that reality, and then consciously and deliberately motivating yourself and your teams using rewards, is one of the most powerful tools I have found, whether it’s in my personal, family, and professional life.

When planning and executing each zig and zag, you should attach a reward to each target. If you find the right rewards for your people, once they hit their goal they will be willing and even anxious to turn toward the next goal.

Every great leader knows how to motivate people. It does not matter if you are a CEO, a coach, a school teacher, a middle manager, or a parent, a big part of your job is being the psychologist or therapist who knows how to put out little rewards that get the people around you to behave consistently in working toward the goals you’ve established. Lee Iacocca said, “Start with good people, lay out the rules, communicate with your employees, motivate them and reward them. If you do all of those things effectively, you can’t miss.” Lee Iococca (b. 1924). U.S. Businessman. Talking Straight (chapter 4, “Good Business—More in Management”)(1988).

In our current test business, Curtis and I received a request from a client that wanted to place a large order for high end, specialty products.We went to the manufacturer of these products and were able to open an account.However, when it came time to sign the contract with the vendor, it contained language prohibiting our operating a business model that was identical to our business model.The order we were trying to fill was worth a large sum of money.And the likelihood of the vendor ever figuring out we were in violation of the contract was minimal.In our zeal to land this account, Curtis and I conveniently forgot to pay close attention to this clause in the contract.However, Koral, who is one of my trusted gatekeepers, reminded us that signing the contract would run counter to our values.As lucrative as this deal would have been to our company, we passed on the order.It just seemed that if we were going to lose sleep, it would be better to lose it over the loss of revenue rather than the violation of our code of conduct.

In a previous business Curtis and I founded, we did not follow our own guardrails. We had put a financial guardrail in place stating that we would always keep a $100,000, three-month buffer in place to protect us if the business took a downturn. We also agreed that if things went south, we would reduce expenses, rather than dip into our reserve, in order to maintain a positive cash flow.

After several years of mind-blowing success, the business did suffer a downturn. It wasn’t long before we saw ourselves dipping below the $100,000 threshold. At the time we had a team we felt loyal to, and we did not want to have to cut back. So we lowered our threshold to $50,000. In making that decision, we broke our rule and crashed through our guardrail. But we felt justified in doing so because of our previous success. Before we knew it, we had crashed through the guardrail again and spent that last $50,000. At this point, instead of cutting our losses, we decided to create another business plan. Unfortunately, our team was not a good match for our new venture. Ultimately, with no cash left, we had to lay off the entire team we had been trying to protect. We also had to terminate what had been a very productive partnership and part ways.

We would have all been so much better off if we had reduced our expenses and stayed within that first guardrail. Yes, we would have had to lay off one or two employees or cut back on expenses in some other way. As painful as that sounds, it would have been so much better than having to kill the whole business. We could have saved our most valuable employees and avoided a lot of pain and heartache.

Our blunder led to Curtis and me parting ways for almost four years. Now we are working together again and building a successful business. And we’re hoping we will have the good sense not to forget our need to stay within the guardrails we’ve established.

Summary

As you are traveling toward your beacon in the fog, you will need guardrails to keep you from heading over a cliff or wandering out into the weeds. For each of your zigs, you should establish a financial number, an allocation of time, a duration of time, and a financial target to control the resources and energy you are going to put into that particular zig. You then need to create a list of the other guardrails that will keep you out of the weeds. Finally, remember the need to establish a network of trusted associates who will keep you from heading out of bounds network or drifting toward the edge of a cliff. These guardrails will grow out of and be aligned with the values you defined in Chapter 3. They will then have the power to keep you on target as you zigzag toward your beacon in the fog.

I have learned the hard way that every time that I do not keep my finger on the pulse on the finances of my company, it goes into the weeds. Once, I returned from a vacation in Nepal to find that my partner had obligated us to a bunch of expenses without our having the income to pay for them. To cover his commitments, he basically sold off our inventory in a fire sale. He was so proud that he had sold so much product; but he did not bother to look at the bottom line, and we took a huge loss on the items he sold. He seemed to have forgotten that sales don’t really count for much if they don’t actually make a profit.

I really do not love doing the finances, but I have learned that no one else is going to manage my money the way I manage it. I always pay my bills on time, and I always know exactly how much is in my bank account. I simply do not spend money I do not have, and if I’m not keeping track of my finances I know I could find myself in a position that would force me outside of my guardrails.

I will not make personal guarantees on things that I have no control over

Years ago, I was hired as a young CEO of a small startup company. I did not have ownership, but I was eager to impress the owners and show that I was in the game. The company needed a batch of new computers for the employees. I thought I was demonstrating my commitment by volunteering to sign for the lease on these new computers. So, I signed a personal guarantee that obligated me to a three-year lease. Needless to say, the business collapsed along with the rest of the Internet bubble. Here I was without a job, and I had to pay $800 each month toward these computers. I brought them home and lined them up in my basement. They had absolutely no value to me, other than my kids learned great computer skills. I did fulfill my obligation, but I vowed never to sign a personal guarantee on something over which I do not have complete control.

I protect my personal network

One of my guardrails is that I will protect my personal network. I’ve been offered countless opportunities to get involved in businesses that would have been dependent on tapping into my networks of family and close personal friends. At times, I would have been looking to them for capital. At other times, I would have been using them as my primary pool to market to. For me personally, I’m very protective of my family and friends because I know that they will be very hard to replace if a business goes south. And, as I consider whether to involve them, I examine the situation by asking a simple question, “What’s the worst that could happen?”

I stay focused on my values

I try to always ensure that my business life conforms to my personal beliefs and values. Obviously, I will not do anything that is illegal or unethical. For some, that line may be a bit fuzzy, but my guardrail is whether I would ever have to justify or rationalize my actions to my wife or my children (or my mother!).

Sometimes, my decisions are made by the simple measure of whether an opportunity feels right to me. Not long ago, I was approached about doing business with an individual who was manufacturing and selling diet products. The opportunity seemed promising, so I went home and told my wife about it. Given her experience as a registered nurse, she examined the product and then told me why she felt it was not safe and why she felt this venture wasn’t something I should have my name associated with. The product was perfectly legal. But it was not something my wife believed in, so I did not pursue the opportunity.

Out-of-Bounds Worksheet

List the people who will be your out of bounds network:

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List the out of bounds markers in your life:

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List four or five things of how you will know when you are out of bounds. Is it a gut feeling, panic, scarcity mindset, etc:

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List the things that you consider to be completely out of bounds in your life:

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Identify exactly where you will change your direction on each zig and zag:

Have a direct conversation with each member of your out of bounds network. Make sure they clearly understand what your out of bounds markers are and what their responsibility is to keep you within those bounds.

The following are brief elaborations on the rules I have set for myself—the reasons behind each guardrail. Again, remember that your circumstances and needs are different from mine, just as each ski slope is different. The key is that you need to define what guardrails you need in your life.

I will not risk my family’s financial stability

Before I took the plunge into full-time entrepreneurship, my wife and I had paid off our home. This was a huge milestone for us, and it provided us with some sense of security as I undertook pursuits that involved a much higher degree of risk. I have committed that I will not jeopardize my home because I do not want to take risks with my family’s financial security.

I keep my teams small

Whether I’ve been working for an organization or running a small business, I have always preferred to keep my teams small. I know myself well enough to know that this is where I excel. I have found that if I keep my teams under fifteen employees, then I can know the needs, interests, and desires of each person. I can get to know what motivates them so I can push the right buttons to keep each person going. I have run much larger teams, but keeping them small results in the highest output for the amount of input I can give.

I have a good friend who had the courage to become an entrepreneur fifteen years ago. He and his family came close to living on wheat and water so he could create his business. He maxed out credit cards and used whatever he had to become successful. And, indeed, he did become successful and profitable. He and his business partner then decided to grow the company even bigger, and they were able to raise a couple million dollars in venture capital. They continued to work hard and became even more successful. They were the rave of all of the business magazines in our area. They won awards and were highly regarded. However, bit-by-bit, as financial challenges hit, they sought out more venture capital. But each time, they also signed away a bit more of their lives; to where the venture capitalists had diluted the ownership of a company they had sacrificed so much to build. Now my friend is at a point where he has minimal ownership in the company, and yet he is contractually obligated to run it for the venture capitalists. Of course, the venture capitalists demand that he put in the same amount of work and energy as when he started the company. After years of hard work, he still never gets to spend the time with his family that he was hoping this business would allow. He is now middle aged, and he is burned out. If he would have stayed on his initial course and built his business a little more slowly, he could have zigged and zagged his way to permanent success. He now either has to start all over or continue to work in a company he no longer controls. There are times and places for venture capital but not as frequently as people think, and it is not my desired funding method.

Weeds are diversions, inefficiencies, and even short-term successes that distract you from the course you have set for yourself. Weeds can be either negative or positive forces. They may take the form of being stuck with a large team you just can’t find a way to keep motivated. They might involve becoming so mesmerized with the profitability you’ve achieved that you forget to move on to your next step. Your personal weeds might have to do with a tendency to continually react to everyone else’s demands instead of moving toward your goal.

Just as important as establishing the values that will serve as your road map is your need to set up the guardrails that will keep you out of the weeds. The guardrails you’ll need to keep you out of the weeds are very personal and will differ according to your circumstances and objectives. Everyone should have guardrails in place for the various parts of each zig and zag so that you are always in control of your financial number, your allocation of time, your duration of time, and your financial target. Your other guardrails will be determined by factors such as your tolerance for risk, your family’s tolerance for risk, your value system, and what portion of your personal network you are willing to expose to your endeavor.

I’m going to share some of my guardrails, but remember that these are my rules, not yours. I share them only to illustrate how important it is to give careful, specific thought to your guardrails, rather than attempting to put them in place when you’re in the middle of heading over the cliff:

·I will not jeopardize the financial stability of my home or family. I am not going to mortgage my house for my business.

·I like to keep my teams small (under fifteen people).

·I will be very careful in taking venture capital. I want to retain ownership in my companies.

·I must control the finances of my business.

·I will not sign personal guarantees on a business I do not personally control.

·I will not work with people I do not enjoy. Whether it is a customer, a vendor, or an employee, life is too short to work with miserable people.

My list is actually longer, but these are a few examples of my guardrails. If I find myself getting near the edge on any of these, my wife, my business partner, or my executive admin each knows me well enough to tell me I am starting to cross the line. And I expect them to not stand by silently.

The guardrails you create must be closely aligned with the values you set in chapter 3. You need to have people in your life who will tell you out when you are out of bounds. I have a good friend who was a successful and well-known college basketball coach until he got embroiled in some politics and lost his job. We were talking not long after that, and he shared what I consider to be a very profound insight. He said, “Rich, when I was winning championships, everyone laughed at my jokes. Now they only laugh when my jokes are actually funny.” You need someone in your inner circle who knows you and who you trust to tell you if your jokes are funny or not.

Alex Mendozian is a teleseminar trainer. We had discussed the possibility of working on a project together. Before we began, he called me and said, “Rich, I have some good news and some bad news. I’d really like to work with you. That is the good news. The bad news is before I do, I need to have an intervention in your life.” I pushed back, thinking, “What is he talking about? I don’t have a drinking or a drug problem!” He continued, “Yes, you need an intervention!” He then got my wife and his executive assistant on the phone and explained he was having this intervention because I had to quit saying “Yes” to everyone and everything. Warren Buffet once said, “The difference between successful people and really successful people is that very successful people say ‘no’ to almost everything.”

Sometimes, in your zeal to reach your beacon in the fog, everything seems possible. It’s a time when you’re generating a lot of ideas. It’s a time when, out of necessity, you need to fire, fire, fire, and then aim. I refer to this part of zig number 1 as the time I have to weave gold out of straw. During this time I may not have a lot of resources, and I may find myself holding things together with duct tape and bailing wire. As I’m trying to get something to work that will generate cash, I find myself saying, “Yes, yes, yes, no; …yes, yes, yes, maybe.”

Once I get to the next zag, I have to create systematic and organized processes so I can hire employees and teach them how to make the business work. During this time, I find myself saying “No” about half the time. Part of that involves learning the discipline of delegating and letting others do the work for me.

Getting to the third zig demonstrates that I have achieved success by reaching cash creating an organization that is working. Now I need to scale it. This is a much more controlled phase of the process because I do not want to destroy what I have just created. I finally have all of the gears meshing, and I now need to figure out how to scale the business so it will generate income independent of my direct involvement. During this period, I find myself needing to say “No” far more often.

Another guardrail you need to put in place is identifying and empowering those people in your life who will help you say “No” and who will let you know when you are heading out of bounds. For me, those people include my wife and my executive assistant, both of whom are excellent at letting me know when I am crossing the lines I’ve established. My children will sometimes even tell me when I am out of line—and I’ve learned to listen. My business partner is another person I make sure I listen to. Unfortunately, it’s rare that your subordinates will point out when you’re heading toward danger. Some see things quite clearly, but many are either making sure they look good in your eyes, or they are afraid of your reaction. If one speaks up, listen, unless it feels like they’re stoking your ego.

As you zigzag down that mountain toward your goal, you need to realize there are hazards on either side of the ski run. Ski resorts groom and prepare the areas intended for skiers; however, experienced skiers know that just beyond the groomed runs are trees, rocks, potential avalanches, cliffs, and other dangers that may cause injury or even death. The same is true in business and life. If we’re smart, we establish boundaries and guardrails to keep us away from perils and on the groomed slopes that lead to our goals.

Some people think zigzagging is easy or a lazy person’s game. The reality is it requires great discipline and control. Any skier will tell you that traversing a steep mountain requires a strong back and legs, quick reflexes, and agility, while heading straight down is far less taxing. That is, until you crash and burn.

To avoid disaster, you’re going to want to create boundaries and set guardrails, which will keep you headed in the direction of your goal—and away from your own personal train wreck.

Keeping Your Zigzags under Control

When you are beginning to head toward your beacon in the fog, you want to concentrate on three zigs and zags at a time. That will keep you focused and under control. To help you with that, think in terms of devoting 65 percent of your time and resources on zig number 1 (driving to profitability), with 25 percent spent on planning and preparing for zag number 2 (adding resources and processes once you get to cash). The final 10 percent of your time and resources should be spent planning how you want to scale your undertaking in zig number 3 (creating scale). If you’re looking beyond three zigs, life gets too complex.

Once you have hit zig number 1 and your business is profitable, you need to turn and head toward zig number 2. It’s easy, once you have cash coming in, to think you can skip making the turn. But if you just stay in zig number 1, you may miss out on the dreams and goals defined as your true beacon in the fog. (And remember cash alone is not a beacon worth pursuing.)

Once you are profitable, you should shift and spend about 65 percent of your time and energy on zag number 2, with 25 percent of your time spent on planning and preparing for zig number 3. Again, if you do not make this next turn, you may find yourself with a lot of resources, but never hitting that big goal. The last 10 percent of your time and efforts can then go toward setting another series of zigs that will help you get even closer to your beacon in the fog.

Some people think zigzagging is easy or a lazy person’s game. The reality is it requires great discipline and control. Any skier will tell you that traversing a steep mountain requires a strong back and legs, quick reflexes, and agility, while heading straight down is far less taxing. That is, until you crash and burn.

To avoid disaster, you’re going to want to create boundaries and set guardrails, which will keep you headed in the direction of your goal—and away from your own personal train wreck.

When I am planning new ideas for my business or for my life I like to use a tool I created called The Decision Matrix. It helps me decide which ideas or options fit into my value plan. This decision matrix can be used for any kind of decision you need to make in your life. I have used it to help me decide which jobs I should take, where I would like to live, and, yes, what businesses and scale ideas I should pursue. I love to use this model to appease the left hemisphere of my brain, which is the logical side. It does not always tell me exactly which option that I want to take, but it does help me weed out the options that are best not to take. It is really straightforward and simple. Here is how it works:

Across the top of the paper, spreadsheet or whiteboard, I compose a list of the top ten or fifteen (maximum) things that are important to me for the particular decision I am trying to make. For example, in a business some of the things I might want that business to do would include making me a lot of money, flexibility of lifestyle, giving back to society, or international travel. If I were making a decision on where to buy a new home, I may list across the top things like location, quality of schools, safety, friendliness of neighbors, quality of the construction, yard for the dog, a good view, etc.

Once I have made my list across the top of the things that are most important to me in this decision, then I rate them in order of priority as to how important they are to me. The most important item would have a rating of 2. The next item would be ranked a 1.9, then 1.8, all the way down to the least important item.

In the business example, I may give “flexibility of lifestyle” a 1.8 rating and the “international travel,” which I love but which may not be as important to me as my lifestyle, a 1.5 rating. If I were moving to a new house, I would rate the quality of schools a 2, where I might rate the view I desire a 1.2.

Once I have my values of what I desire listed across the top and weighted in order of priority, then I list down the left side all of the options I am considering. If I am thinking of ideas that would scale my business, I would list all of those down the left side. If I were purchasing a house I would list all of the different property options down that left side. If I were deciding which job opportunity I wanted to pursue or which college to attend, whatever it is I am deciding I list the options down the left side.

After my chart is complete, I ignore the weight factor of those important items and I fill in the blanks. I just go through really quickly and assess to the best of my judgment how my idea or decision would rank with my important item. I use a score of 1 to 10, with 10 being the highest. After I have filled out the chart, then I simply take the score of the idea to the important item and multiply it by the weighted factor of that idea. I then sum all of the important items together for a score of each idea.

If there are several people involved, then I have each person do their own weight factor. We add up the weight factors and then use that number to score the spreadsheet. Together we decide the score between 1 -10 of how well that idea would fit our needs. If my wife wants a good view and I want a shorter commute to work, we would weigh those items differently.

I like to do this exercise when I am relaxed and calm. It takes about an hour or so, but it is a really precise and fun way to sort out my ideas. Oftentimes, I’ll get the top four of five scoring ideas. These scores are not the only factors in my decisions, but they do usually tell me which of the options are not the ones that I want to pursue. It helps me to hone in a little bit to where I want to take my next zig or zag.

We are currently trying to figure out the scale phase in our Froghair business. When we initially defined our three zigs and zags, we defined our scale as making three sales into our direct channel each day. As we progressed, we hit profitability and were able to add resources, but we realized that our plan for scaling business was not viable. So, we had to adjust our strategy and go after a second option. This time our plan was to sell items to large companies to use as their corporate gifts. This has had some success, but we are still exploring other options. Specifically, we are looking at generating Internet leads in our area of the market. Almost everyday we’re using the zig zag principle because it gives us the flexibility to adjust and change course within the boundaries that we have set. As we’ve seen obstacles, we’ve skied around them. And we’ve been prepared to do so because we know they’re going to come. My experience has taught me there is a much higher probability of success when you use this principle.

Summary

Zig number 3 involvesa major shift in mindset. You are no longer working in your business; you are working on your business. Your are becoming deliberate and you have structures in place. You’ve survived the determination phase. You’ve survived the discipline phase. Now you can leverage yourself, leverage the value of the market you’re in, and start to really see some success.